Traveling is already hectic enough. Remembering to ask for paper receipts and figuring out where you put all of them when you get home is really tedious. The good news is that the government has created a tool that simplifies the process a lot.
Per diems are essentially a standard rate that the US government sets indicating how much it would likely cost someone to feed themselves while they're traveling for business. They created it for government workers, but thankfully for the rest of us it's a tool we can use on our own taxes.
When you travel overnight (i.e. not day trips) and it's for your freelance work, you can use the "meals and incidentals rate" to calculate your meals expenses for the city, state, or foreign location where you're traveling.
Side note: Unfortunately for freelancers, we generally can't take the "lodging" per diem, we have to keep our actual receipts for that.
How to Calculate Per Diems
Here's an example: Let's say in 2021 you live in Brooklyn and have to travel to LA to meet and work with a client for 4 days. Here's how you would calculate the cost of your meals for that trip:
- Got to www.perdiem101.com and look up the 2021 "meals & incidentals" rate for Los Angeles, California (spoiler: it's $66 for 2021)
- Of those 4 days, you were traveling on the first day and the fourth day (for travel days we only get to take 75% of the per diem rate)
- So, that means $66.00 x 2 for the days you were in LA for the full day, and $49.50 x 2 for the two days you were traveling. Your total for the trip is: $231
- Note: If you often have to pay for meals with clients it may be that your actual costs would exceed the per diem, but if you're mostly just covering your own costs, then per diems are generally your friend.
You can also get per diems rates for US and International travel on the GSA website.
Remember: The rates change every year, so make sure to do fresh math each year even if you go back to the same cities for travel regularly.
You Can Also Use Our Handy Per Diem Calculator
Calculating per diems can be tedious for those of you who travel a lot for work. So we made a handy tool to make the process easier.
How to use our per diem calculator:
- Clicking on the image or link below will prompt you to make a copy of the Google spreadsheet. From there you can remove the sample data and enter your own 2021 information.
- Remember, for the days we're traveling to or from a destination (travel days), we only get to take 75%, so if you took a 7 day trip and two of those days are travel days, then your total "days" for that trip in the spreadsheet should be 6.5 (5 full days + 0.75 for first travel day + 0.75 for second travel day).
- NOTE: This spreadsheet is for 2021 only, not for other tax years.
On Our Website
When you’re filling out your info on our website, do your best to calculate per diems for any trips you take. Add that amount to any local business meal expenses with clients or peers to get your total for the meals category for a given year.
Once you have your information uploaded to Brass Taxes, make an appointment and feel free to ask your preparer any additional questions about the totals you have for meals. You can also reach out to firstname.lastname@example.org with questions.